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So What Does It Mean to Be “Best-In-Class”?

In this series of posts we’ve discussed the importance of enterprise software to businesses, and how (and why) they need ERP to earn the right to be called Best in Class.

So what exactly does Best in Class mean?

In the Aberdeen Research survey we’ve been discussing these past few posts, they’ve defined four key performance criteria that lead to a company be classified as either:

Best in Class (Top 20%)

Industry Average (Middle 50%)

or Laggard (Bottom 30%)

Here’s how companies in each class perform across four key indicators:

1. If you’re best in class, you close the books quickly each month in order to get fast and strong visibility over key financial health metrics. You take only about two and a half days to close your month on average. Industry average firms require a week. Laggards require almost nine days.

2. If you’re best in class you turn receivables quickly, which means your cash flow is better, and you’re that much less reliant on external financing. You collect your Days of Sales Outstanding (DSO) in half the time of the laggards (and about 25% faster than the average company).

3. If you’re best in class, your customers are happier and better served, because you’re delivering on average 96% complete and on-time. An average company achieves “complete and on-time” 88% of the time, and the laggards less than 80%.

4. And finally, if you’re best in class, your operating margins on average have grown by 21% over the past two years. Average firms achieved only half that. And laggards have shown no growth in operating margins over the past two years.

And because of their success in those four key criteria derived from ERP, the best in class firms will have:

Lower administrative and operational costs

Improved on-time delivery

Increased speed in decision-making

Increased customer satisfaction

An improved sales pipeline

Better knowledge, visibility and collaboration

Just some of the rewards from implementing an ERP system… and eventually becoming Best In Class.